SRIHARIKOTA, INDIA - JUNE 30: India's Polar Satellite Launch Vehicle PSLV-C23 launched by Indian Space Research Organization (ISRO) from the Satish Dhawan Space Centre on June 30, 2014 in Sriharikota, India. India today launched five foreign satellites on board an indigenous rocket, prompting Prime Minister Narendra Modi to asks Indian scientists to develop a SAARC satellite which can be dedicated as a gift to the neighbours. (Photo by Subrata Biswas/Hindustan Times via Getty Images)

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Antrix Corporation, the marketing and commercial arm of the Indian Space Research Organisation, better be scrambling for their top lawyers. The International Court of Arbitration (ICA) had awarded a $672 million, or Rs 4,435 crore, in damages to Devas Multimedia as reparations in its dispute with Antrix. If the Bangalore-based organisation were to pay up, it could potentially blow a debilitating hole in the finances of the company that could set it back by decades.

Antrix's latest, publicly-available financial statement says that as of March 2014, it had a profit, after tax and the previous year's surplus, of Rs 200 crore. This was on the back of an income of Rs 1,608 crore and expenses of Rs 1,311crore of which the company paid fees foreign-exchange outgo of Rs 527.83 crore.

The Business Standardsays that this year, Antrix reported a revenue of Rs 1800 crore but more detailed figures for profits and expenses towards foreign consultancy weren't immediately available.

Though Antrix has doubled its profit between 2009-10 and 2013-14 from Rs 108 to 200 crore it barely has surpluses left over after channeling these gains to various development activities that are also now key to Isro's own ambitions of becoming a go-to destination for small-and-mid-sized satellite launches. Paying the fine then could effectively mean channeling its profits for decades.

In response to a Parliament question, Union Minister for Science and Technology, Jitendra Singh, said that India's space agency Isro had made $100 million from launching 45 commercial satellites in space. That is however money made (and not profits) over eight years and by comparison Arianespace, a French company and the dominant player in the commercial space launch market reported revenues of €1.399 and a €3 million profit just last year.

Isro averages 3-4 launches a year and aims to hit at least 10 in the coming years. To then have its commercial arm ear-mark Rs 4000 crore towards paying fines when it is looking to expand launching capacity and improve the technological capacity to launch heavier rockets would be a serious setback. According to the Finance Ministry, Isro has been allocated Rs 7,388 crores for this financial year.

There have been no statements from Antrix or Isro yet on how it plans to counter the salvo from the international court, that no doubt, gladdens Devas. The provisions of the Arbitration and Concilliation Act, 1996--that governs monetary disputes between international entities--say that courts in India are generally bound to execute orders of the ICA, unless the agreements are violative of India's public policy or the spirit of its laws.

A press statement from Devas says:

“Devas Multimedia and its shareholders, including highly regarded international investors, are pleased

that the ICC Tribunal unanimously ruled in its favor and found that Antrix is liable for unlawfully

terminating the Devas-Antrix Agreement in February 2011. The ICC Tribunal also awarded damages

and pre-award interest totaling USD $672 million to Devas with post-award interest accruing at 18%

per annum on that sum until the award is fully paid. ”

“Devas is hopeful that Antrix will now live up to its legal obligations and pay the award

When contacted a spokesperson said that they couldn't immediately share a copy of the ICA order that awarded them these damages.

The so-called Antrix-Devas deal involved a 2005 agreement between Isro and Devas multimedia whereby Isro would lease out some transponders aboard the GSAT-6 satellite to the multinational company. Devas was to use these transponders for multimedia broadcasting purposes using a technology, which former Isro chairman K Radhakrishnan described to Mint in 2011, as “extremely innovative”.

Hell broke loose when in 2011, The Hindu Business Line newspaper reported that the Comptroller and Auditor General, the government’s auditor, was looking into this 2005 agreement between Isro and Devas. In the heady days of the 2-G scam, when the government began to be entangled in a series of corruption scandals, the Hindu reported that this agreeement gave Devas 70MHz of spectrum in the so-called S-band for roughly Rs 2,000 crore.

However that comparison was baseless because leasing transponders on an Isro satellite was different from the licensing of airways for 2G network. The latter involved favouritism where some companies were allowed to buy spectrum at prices much below their market value and in blatant violation of prescribed procedure. In the case of Devas and Antrix, space on an Isro satellite was made available to Devas to test and eventually sell a nascent technology.

Isro said the deal was off because government had changed its priorities and needed those frequency slots for security and strategic purposes. Devas sued Antrix for nearly a bilion dollars and, as per the terms of the agreement, took Antrix to the international arbitration court.